Proven Strategies for Making Existing Buildings Energy and Operationally Efficient

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Proven Strategies for Making Existing Buildings
Energy and Operationally Efficient

• REMOVING OBSTACLES TO ENERGY EFFICIENCYTHROUGH
  BUSINESS CASE AND REAL RESULTS
• John W. Conover IV, President, Trane Commercial
  Americas At Fairleigh Dickinson University

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About John W. Conover IV

• Leader for the Trane commercial business in the
  Americas 14,200 employees in the U.S., Canada
  and Latin America
• Been in the HVAC-R industry for 30 years
• During tenure with Trane, played integral role in
  better understanding customer expectations and
  market needs such as the growing search for
  energy efficiency solutions.
• Focus heavily on gaining innovative insights on
  what it takes to acquire, satisfy and retain
  customers.
• Earned a bachelors of science degree in civil
  engineering from Lehigh University and is a
  registered professional engineer.
• Attended the Executive Leadership Program at the
  Wharton School of Business at the University of
  Pennsylvania.
• John and his wife Marsha live in New Jersey and
  are the proud parents of four children

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About Ingersoll Rand

• 17 billion diversified industrial company
• 64,000 employees worldwide
• More than 100 manufacturing facilities worldwide
• Operate in every major geographic region
• Strategic brands are 1 or 2 in their markets

About Trane Commercial Equipment
Systems Residential Products Aftermarket
Parts Trane Building Services
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How Ingersoll Rand Walks the Talkabout Energy
Efficiency

• INGERSOLL RAND IS REDUCING ITS OWN ENVIRONMENTAL
  FOOTPRINT
• Trane and Ingersoll Rand active with the U.S.
  Environmental Protection Agency
• Members of Climate Leader Program
• Joined Smart Way Program To reduce environmental
  impact of transportation activities
• Members of the Green Chill program Energy
  efficiency in the supermarket industry
• Member of the Dow Jones North American
  Sustainability Index, various investing indicies
   
• Established internal goals for reduction of
  energy use and climate change emissions
• Energy audit program to understand energy
  use/strategies for reducing consumption
• Established a Sustainability Strategy Council to
  further integrate Sustainability principles
  throughout our business
• Created green teams in all locations to engage
  employees and champion reduction
• Established national patch program with Girl
  Scouts of the Americas called BTU Crew to
  encourage girls to reduce energy use in community
  buildings
• LEED certified buildings in the U.S. and Asia

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Why Trane is Talking About Energy Efficiency

• WHAT WE DO
• Trane works with leaders who take a broad view of
  organizational performance
• We offer most energy efficient systems along with
  energy management and optimization service that
  leverages operational savings to support business
  objectives
• OUR EXPERIENCE
• 1 out of every 2 buildings in the U.S. has a
  Trane system
• More LEED certified Accredited Professionals (AP)
  in the industry
• Most energy efficient large chilled water system
  on the market today
• More than 125 performance contracting projects
• Average project in the range of 2M with 10 year
  contract
• OUR ENVIRONMENTAL CONTRIBUTION (ENERGY SAVINGS
  EQUIVALENT)
• 18,722 cars taken off the highway
• 11,323,812 gallons of gasoline saved
• 21,843 planted mature trees
• 68,074,062 gallons of water saved
• 224,666,420 pounds of CO2 saved

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Perfect StormFactors Influencing Energy
Efficiency Building Owners Today

• ENERGY USE IN EXISTING BUILDINGS A PRIORITY
• Buildings consume 1/3 of energy worldwide and
  expected to grow Population growth,
  urbanization, developing countries
• Energy use in buildings projected to grow
• Up to 40 of total operating expenses of some
  buildings
• Single greatest contributor to global warming
• Tremendous amount of energy-related policy
• Improve environment and reduce oil reliance
• Stimulate the economy and create jobs
• Reduce risk and increase business confidence

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Perfect StormFactors Influencing Energy
Efficiency Building Owners Today

• ESPECIALLY IN CHALLENGING ECONOMIC ENVIRONMENT
• Reduced operating budgets and deferred
  maintenance
• New construction outlook remains weak
• Considered to be operating in a global
  recessionary market
• Businesses pinched more than ever
• Operating costs continue to rise with intense
  pressure to reduce
• Access to cash and credit more limited than ever
• Limited appetite for capital investments without
  clear payback

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What This MeansFor Building Owners and Business
Leaders

• ENERGY EFFICIENCY IS A BUSINESS IMPERATIVE
• More than a nice to do or method for being
  socially responsible
• There are tangible business results directly
  associated with energy efficiency
• Financial, customer satisfaction, employee
  productivity
• Not to mention that it makes assets more valuable
  
• And theres a positive environmental contribution
  
• As business leaders, our job is to remove
  obstacles to energy efficiency
• Must be C-level owned / championed
• Need a financially-motivated business plan
• Dont get caught up in the noise there are
  proven strategies and technologies for making
  existing business more efficient

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Why A C-Level ImperativeFor Building Owners and
Business Leaders
CONSERVATION IS FOR THE BOILER ROOM EFFICIENCY
IS FOR THE BOARD ROOM

• ENERGY CONSERVATION
• Using less energy, without necessarily increasing
  the output
• Fewer truck runs to / from warehouse
• Turning off unused equipment on weekends /
  off-hours
• Modifying behaviors and practices
• Low hanging fruit / low first cost / fast payback
  projects
• Holding the Gains depends on culture

• ENERGY EFFICIENCY
• Using less energy and achieving more output
• Rightsizing / replacing infrastructure
• Process / product improvement
• Less environmental impact in the supply chain
• Often higher initial cost, but better life cycle
  payback (need to understand the financials)
• Holding the gains depends on automatic controls
  and monitoring

The Value of Efficiency Reduce production
losses, spoilage, downtime while increasing good
will and customer impact
Alliance to Save Energy Strategic Industrial
Energy Efficiency
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Getting Started A Financially-Motivated Business
Case
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Making the Case for Energy Efficiency

• Critical question Is your building overhead or
  an asset?

Owners who view their buildings as assets link
the physical environment to business outcomes
customer and employee satisfaction, productivity,
operating expense reduction, among others. These
buildings can be high performance and tie to
the mission, values and results of a business

• Value to people the building serves (environment,
  comfort, safety)
• Value to customers and community (competence,
  environmental responsibility)
• Value to the bottom line (cost savings,
  avoidance, ROIC)

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Making the Case for Energy Efficiency
Public Private
Improve Infrastructure Stay Competitive (Attract Tenants, Customers, Talent)
Reduce Maintenance Costs Reduce Maintenance Costs
Reduce Operating Costs Reduce Operating Costs
Optimize Capital Budget Optimize Capital Budget
Improve Indoor Environment (Comfort Occupant Performance) Improve Indoor Environment (Comfort Occupant Performance)
Be Socially Responsible Add Asset Value

• Critical question What are your driving factors
  for change?

• Every building, project and customer is different
  making each project unique
• Modeling begins with understanding
• Why project was initiated
• Goals and objectives
• Appetite for risk

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Making the Case for Energy Efficiency

• Critical question How will you fund your
  project?

• Three budget categories
• Energy budget
• Operating expense budget
• Capital improvement budget
• Potential for more robust projects
• Evaluate benefits beyond payback period
• Energy projects reduce operating and capital
  improvement budgets

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Making the Case for Energy Efficiency

• Critical question How will you fund your
  project?

• Goal Allocate potential savings from operating
  budgets and avoidance from capital budgets to
  fund project
• Operating budgets should reflect the funding of
  the debt service for the project with offsets to
  energy and maintenance budgets.
• Capital budgets should also reflect the funding
  of debt service...this is the amount of capital
  avoided as a result of the project.
• Projects that take a comprehensive approach
  create a consistent funding expectation and help
  mitigate unexpected spikes in funding
  requirements.

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Making the Case for Energy Efficiency

• Critical question How will your project be
  delivered?

• Performance criteria examples
• Reliability (uptime, of unplanned incidents)
• Efficiency (kW/Ton, mcf/BTU, etc.)
• Operating status (state of readiness,
  availability)
• Field conditions (clean towers, condensers, air
  intake)
• Output (BTUs, cooling tons, cfm, gpm)
• Capacity (peak output matched to load)
• Quality (power quality, load factors, IAQ)
• Rate of economic return (sustained energy
  efficiency)

• Though capital remains the same, performance can
  be guaranteed by providers
• Providers compensated based upon success in
  achieving goals
• Contracts typically stipulate how incentives will
  be paid out for elevated performance or penalties
  assessed for missed targets.

The Aberdeen Group, February 2007
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Making the Case for Energy Efficiency

• Critical question What changes can be made based
  upon financial objectives?

Quick Return (0-3 yr payback) Intermediate (3-8 yr payback) Long-term
Retrofit lighting Install new building automation system Replace high efficiency equipment (major systems chiller/boilers)
Update existing building automation systems Improve HVAC systems (CV to VAV) Building envelope improvements
Conduct retro/re-commissioning Implement water conservation Apply renewable technologies
Make behavioral changes (Turn lights off, program systems) Use fans and motors (VFDs, high efficiency change outs) Apply on site/distributive power generation
Explore utility procurement options Apply load shifting technology (ice storage) Implement comprehensive maintenance and repair strategies

• Purpose of the building determines the investment
  strategy
• If a lifecycle return / financial approach is
  taken, owners can enjoy the benefits of
  everything listed on the chart significant
  energy, operating, environmental and business
  benefits

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Making the Case for Energy Efficiency

• Breaking a myth We need to wait for new
  technology or need emerging technology to improve
  energy efficiency

Proven technologies available for all buildings
types meeting various payback requirements

• DISTRICT COOLING/HEATING SYSTEM
• Multiple buildings/ campus/ industrial
• Higher overall system efficiency
• Beautify city outlook
• GEOTHERMAL HEAT PUMP SYSTEM
• Residential and commercial buildings
• Pump energy from underground
• Enjoy energy saving all seasons
• THERMAL STORAGE SYSTEMS
• Large city with high peak demand
• Shift demand from daytime to night
• Reduce blackout during hot summer

• HIGH EFFICIENCY CHILLED WATER SYSTEMS
• Large commercial/industrial buildings
• Generate chilled water for cooling
• Reduce energy consumption by half
• ENERGY RECOVERY
• Less energy to cool fresh air brought into the
  building in summer
• Less energy to pre-heat cold fresh air from
  outside in winter
• Free energy to provide hot water
• INDOOR AIR QUALITY
• Proper ventilation with minimum energy
• Temperature and humidity control
• Filtration options ensure good IAQ

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Making the Case for Energy Efficiency

• Critical question What costs need to be
  considered when financially modeling an energy
  project?

• Total cost of ownership approach
• All of these factors need to be addressed at some
  point
• Modeling the building as a long-term asset
• Offers greater financial transparency
• Will ultimately save energy and operating dollars
  throughout the life of the asset

Visible Costs
Price/Time
Engineering Charges
Energy Costs
CFC Issues
Maintenance Costs
Equipment Shutdown Costs
Construction Change Orders
Legal Costs
Security Costs
Start-up Delays
Indoor Air Quality
Being Green Costs
Fire Protection Cost
Performance Problems
Hidden Costs
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Making the Case for Energy Efficiency

• Critical question How do owners ensure ongoing
  performance of energy projects?

• Proactive maintenance strategy
• Ensure that desired outcomes as assured
  throughout the life of the asset
• Deliver an agreement that is cost-beneficial to
  Trane customers and provides value-driven service
• Doing so will avoid capital, energy and repair
  costs

• Return on investment 10 times
• Reduction in maintenance costs 25 to 30
• Elimination of breakdowns 70 to 75
• Reduction in downtime 35 to 45
• Increase in production 20 to 25.
• --- FEMP Guide, page 5.4

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Making the Case for Energy Efficiency

• Breaking a myth Maintenance is more than just
  break / fix being proactive is a conscious
  strategy

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Making the Case for Energy Efficiency

• Critical question What is the financial model
  (example)?

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Making the Case for Energy Efficiency

• Critical question What is the financial model
  (example)?

• Model offers comprehensive view
• Driving factors, funding and budget allocations,
  capital expenses, total cost of ownership and
  financial return
• Analyzes cash flow over project life
• Model incorporates more ECMs
• If owner considers only energy savings in
  financial decision
• Project would yield a 11.7 year payback
• If owner considers energy, operating cost,
  maintenance and asset replacement cost savings
  over the life of the project
• Project yields a 3 year payback and it generates
  positive cash flow

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Making the Case for Energy Efficiency
Critical statement Different payback, same
return on investment

• Return calculations dependent on benefits
  received beyond initial payback
• Guaranteed returns support analysis beyond simple
  payback calculations and provide financial basis
  for long term investment in sustainability
• Simple payback calculations help assess risk
• Guaranteed savings minimize risk of evaluating
  longer term projects

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How To Get Started And Hold the Gains

• Make efficiency a c-level imperative
• Create a shared vision and create a mindset of
  high performance
• buildings rather than overhead
• Make the business case to understand appetite for
  risk, payback and
• realistic measures / actions that can be
  taken
• Make decisions and initiate your project
• Integrate energy efficiency into business
  strategies, build
• employee engagement
• Measure progress to ensure continuous improvement

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Proving the Model Case Examples of Large Energy
Projects
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Energy Project Makes Manufacturing Facility More
Competitive

• Situation
• Campus-style 102.200-sq-meter (1,1 million-sq-ft)
  heavy industrial manufacturing plant
• Aging infrastructure with low energy efficiency
  and reliability and high operating and
  maintenance costs
• Dramatic downturn in product sales
• While experiencing 70 increase in energy costs
• Corporate goal of 15 reduction in energy cost by
  2013
• Approach
• Factors driving improvements
• Need to stay competitive
• Reduce maintenance and operating costs
• Add asset value

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Energy Project Makes Manufacturing Facility More
Competitive

• Identifying investment benefits

1. Assessment
2. ECM Selection
3. Payback
Analyzed HVAC systems, compressed air and
lighting for efficiency, capacity and effective
operating and maintenance practices. Evaluated
remote monitoring application potential.
Lighting retrofits, building automation upgrades
and hot water boiler
Selected ECMs offer quick return
2.1 million project investment in new air
compressors, hot water boiler, lighting retrofit
and remote monitoring

• Results
• Two-year payback with projected 1.13 million in
  annual energy savings 275,000 in annual labor
  cost reduction
• Energy reduction of 11.5 MKWH equivalent to CO2
  emissions from 11 tanker truckloads
• On track to achieve mandated 15 reduction by
  2013
• Safer, more reliable and more energy-efficient
  plant operations

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Infrastructure Improvements Generate Increased
Production

• Situation
• Single-story 32.500 square-meter (350.000
  square-foot) manufacturing facility with 1,100
  employees
• Needed stable ambient environment for optimized
  consumer product manufacturing
• Outdated, unreliable infrastructure systems
• Approach
• Factors driving improvements
• Need to stay competitive, improve indoor
  environment
• Guaranteed performance of the upgraded system for
  one year, offering on-call maintenance support if
  ambient conditions were not met
• Assurance of improved performance and plant
  reliability, with available on-call support,
  convinced management to complete the upgrades

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Infrastructure Improvements Generate Increased
Production

• Identifying investment benefits

1. Assessment
2. ECM Selection
3. Payback
Analyzed chiller and air handling systems and the
pneumatic building automation system (BAS) for
reliability, efficiency, capacity and performance
High-efficiency chiller systems with variable
flow water pumps, upgraded air handling systems
and centralized BAS --
Quick return BAS Solid return Chiller and air
handling systems
8 million system upgrade

• Results
• Customer able to more effectively compete
• Increased production in improved environment
• Maintained near-perfect system performance
• Completed needed adjustments within hours
• Project finished on time and on budget with
  minimal production downtime

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Five Star Hotel Increases Comfort and Efficiency

• Situation
• Five-star Le Meridian Hotel on three-acre complex
• High operating expenses and service costs
• Outdated systems lacking centralized control
• Noise levels compromising guest and employee
  comfort and government regulations
• Approach
• Factors driving improvements increase
  competitiveness, reduce operating costs, add
  asset value
• Identifying investment benefits

1. Assessment
3. Payback
2. ECM Selection
Selected ECMs offer solid return
Evaluated efficiency, capacity, noise, safety and
maintenance
New chiller systems and a centralized (BAS)
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Five Star Hotel Increases Comfort and Efficiency

• Deliverables
• 375K project with reduction of operating costs,
  increasing reliability with a 3.5 year payback
  included systems and remote monitoring
• Results
• Significant reliability increase and 30
  improvement in chiller plant energy efficiency
• BAS achieved additional 6-8 energy savings
• Project completed in tight timeframe with minimal
  guest inconvenience
• Ongoing maintenance contract reduced service
  costs 30
• Noise level reduction of 40 improved guest and
  employee comfort and brought systems to code

32
Hotel Hosts Upgrades for Increased Reliability

• Situation
• 20-story hotel with 518 guest rooms, casino and
  meeting and exhibition
• Frequent breakdowns, reduced efficiency and high
  operating costs from outdated systems
• Difficult-to-access plant room and decentralized
  system control
• Infrastructure systems generating noise
  complaints from guests
• Approach
• Factors driving improvements
• Increase competitiveness
• Reduce operating costs
• Increase asset value
• Environmental responsibility in compliance with
  2010 mandate

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Hotel Hosts Upgrades for Increased Reliability

• Identifying investment benefits

2. EMC Selection
1. Assessment
3. Payback
High-efficiency chiller systems with variable
flow water pumps to reduce energy use and a
centralized BAS
Evaluated central plant comfort systems for
performance, energy consumption, operational
efficiencies and maintenance access
Selected ECMs offer medium timed return
Delivered 2 million integrated systems solution
with projected six year payback

• Results
• 15 improvement in overall building energy
  efficiency (30 system improvement)
• Significantly reduced carbon emissions to meet
  2010 mandates
• Increased comfort by reducing system noise by
  25dbA
• Reduced system breakdowns to near zero (reduction
  in maintenance costs)
• Completed project off-season without disrupting
  hotel operations

34
Municipality Conserves Resources, Increases
Comfort

• Situation
• Master-planned city of 36,000 residents
• Aging infrastructure, high energy consumption and
  mechanical system and comfort issues in city
  buildings
• Approach
• Factors driving improvements Improve
  infrastructure, reduce operating costs, improve
  comfort, be environmentally and socially
  responsible
• Identifying investment benefits

1. Assessment
3. Payback
2. ECM Selection
Analyzed HVAC and lighting efficiency, and
capacity and effectiveness of maintenance
practices
Medium return Water, lighting, building envelope
and insulation Life cycle return BAS and HVAC
High-efficiency HVAC, lighting, water saving
fixtures, BAS, building envelope and insulation
1.3 million performance contracting with 11.5
year payback including annual savings of 120,000
based on todays utility rates
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Municipality Conserves Resources, Increases
Comfort

• Results
• No capital funding increase to make significant
  physical improvements
• Project guaranteed energy savings of 877,266 kWh
  per year, equivalent to recycling 215 tonnes of
  waste
• First full year following renovations showed 10
  energy savings above predicted savings
• Project has also saved 18,448 therms of natural
  gas and 1.2 million gallons of water
• Comfort and maintenance issues resolved

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Bottom Line Business Case
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